The COVID-19 pandemic has impacted our lives and world in all manner of ways, and the affects keep rolling.
As a real estate professional, back in mid-March I had no earthly idea what this would all mean for our Denver market. But now, five months later, the jury is clearly in — at least for the relative short-term. Rather than COVID-19 sending our market into a tailspin, it has had the opposite affect and turbo-charged it, sending things into never-before-seen territory, at least by some historic metrics. Whether this is good or bad likely depends on your perspective. If you are a home owner and value climbing property values and equity, then good times are rolling. If, however, you are one of many buyers hoping to get in on the market and take advantage of low interest rates, then it can feel you’re stuck on the outside looking in.
Unlike many aspects of the economy, our housing market never really took a hit in the first place. In April, when the stay-at-home order caused the market to hit pause for a month, home values remained stable. Since that time, the market `recovery’ has looked like a rocket taking off and that recovery has had legs extending through August. A number of factors are driving this. First and foremost, the number of listings, people putting their homes up for sale, is way down from over a year ago. Down in fact 36.6%. Conversely, in July, the number of homes under contract is up 17.2% over a year ago. Confused? Think feeding frenzy. There are fewer homes on the market, but virtually everything that is put out for sale is quickly sold, which is not normal.
I mentioned those historic records — well, there are a few going on. First, the number of active homes for sale is riding along at a 10-year low. Ten years ago, you remember, was the last recession. What was different then is there were not a lot of buyers for those listings. That is what is dramatically different now. Those limited listing are getting grabbed up at a historic rate best measured by the average days-on-market it takes to sell a home, which has been hovering right at 20 days — a historic low. Less surprising are home values have hit record highs with the average price of a single-family home in the city of Denver now standing at $680,000. That, by the way, is about double the average value of homes during the last recession.
What’s the driver to all this? Perhaps the least obvious and most impactful has been the stay-at-home directives. There has been a shift in the market. People staying home working has been a boon to the housing market and a bust for commercial properties. With tons of workers staying home, office space has sat largely empty or with greatly reduced workforce. Want to lease some office space? Great time to do it! Living and working from home, with no end in sight, has spiked interest in homeownership. Secondly, as throwing gas on a hot fire, interest rates have been at historic lows. In that sense, there has never been a better time to buy — if there were only something to buy. You get the quandary.
Where are we going? Well, nothing like a bunch of political turmoil and economic uncertainty to shake things up a bit. With the election on the horizon and no clear sign of COVID-19 letting up, this picture could certainly change. One thing about the real estate market is it is always in the process of shifting. So, if you don’t like what you see, just stay tuned and things will undoubtedly change.
Tom Snyder is the owner and managing broker of Snyder Realty.